One of the highest priorities of the present healthcare system is the ability to collect bad debt. The healthcare system is not able to demand full, prompt payment for healthcare services; and thus there is a large amount of unpaid debt carried by the system. Some industry analysts estimate that hospitals are underpaid by an amount of 5-10% annually by third-party payers, leaving a significant amount of money on the table. Furthermore, some 45 million Americans do not carry health care insurance. Many more Americans face higher deductibles, erosion on coverage and long periods of no insurance. Estimates show that self-pay accounts tend to have a higher number of gross days revenue outstanding for hospitals.
Across the United States alone, estimates show that the amount of bad debt (in the form of accounts receivable from patients) owed to the hospitals, physician practices, nursing homes and the like is on the order of hundreds of billions of dollars. The bad debt problem is the principal driving force behind the chronic cash-flow problems and weak financial vital signs of hospitals.
The bad debt problem is the principal driving force behind the chronic cash-flow problems and weak financial vital signs currently plaguing our nation's healthcare providers. Recent reports attribute the share price downgrades, declines and earnings shortfalls of many American-based healthcare providers to unpaid medical bills, a condition that has plagued these companies for years.
Presently, healthcare providers set aside over $129 billion annually to cover bad debt, amounting to roughly 7 percent of the industry's revenues, and more than double the industry's average net profits of 3 percent. This statistic underscores the magnitude of the problem and the importance of managing the impact of bad debt within the confines of the provider's overall financial portfolio, while providing testament to the importance of recovering bad debt as one of the provider's highest ongoing priorities.
US Published Patent Application 2003/0018563, to Kilgour et al, relates to a method for facilitating a financial investment in at least one accounts receivable owned by a first person, the method comprising the steps of: obtaining a systems manager employing a computer-based system, enrolling the at least one accounts receivable owned by the first person as a lot for a trade using a computer database, receiving at least one bid from at least one bidder for purchasing the lot, and determining the result of the trade for the lot, wherein each account receivable of the at least one accounts receivable is associated with a merchant's buyer and a merchant.
US Published Patent Application 2002/0169708, to Chittenden, relates to a competitive sealed bidding system and a method therefore. The publication disclose and claims a method for competitively sealed bidding on debt obligations over a computer network, the method comprising: inputting a first data into the computer network, the first data associated with a debt obligation desired by a borrower including a bid due date, inputting a second data into the computer network, the second data associated with a bid request including a rate of the debt obligation by a lender to underwrite the debt obligation desired by the borrower, and concealing from the borrower until the bid due date at least the rate of the debt obligation bid by the lender on the computer network.
There is a need for a method of reversing the downward spiraling of healthcare services' bottom line. All healthcare services can benefit by employing a centralized process for obtaining sources that can readily collect bad debt generated by unpaid and overdue accounts receivable.